NEOM inks multiple MoUs to accelerate clean industrial transformation  

NEOM inks multiple MoUs to accelerate clean industrial transformation  
Oxagon will benefit from the new agreements. File.
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Updated 28 November 2023
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NEOM inks multiple MoUs to accelerate clean industrial transformation  

NEOM inks multiple MoUs to accelerate clean industrial transformation  

RIYADH: Saudi Arabia’s sustainable energy push in NEOM is expected to get a further boost as the Kingdom’s $500-billion megacity has signed deals with Bosch and Bain & Co. to accelerate clean industrial transformation in Oxagon.  

Oxagon is the industrial city in NEOM, which will operate with 100 percent renewable energy. The Kingdom also aims to turn this destination to a tourist hub, aligned with the goals outlined in Vision 2030.  

In a post on X, Oxagon revealed that these memorandums of understanding with Bosch and Bain & Co. will help Oxagon “harness the expertise of each organization to shape the future of manufacturing through investments in innovation, technology and talent development.” 

Vishal Wanchoo, CEO of Oxagon, commented: “Bain and Bosch share our vision to transform the existing industrial model. The collaboration aims to accelerate our ambition to enable factories of the future to build products of the future in NEOM and beyond.” 

Developing giga-projects like NEOM is very crucial for Saudi Arabia as the Kingdom, which is on a path of economic diversification, is trying to emerge as a global tourism destination by the end of this decade.  

Through its National Tourism Strategy, Saudi Arabia aims to attract 100 million tourists in the Kingdom by the end of this decade.  

Earlier in October, NEOM released a short video and revealed that construction of a hospital, utilities and a number of roads has been completed within the city. 

The video, which demonstrates the progress of developmental works of the city, noted that more than 3,000 people from 90 countries are working on the giga-project, and over 60,000 construction workers are on-site.  

In the same month, NEOM also received the first major delivery of wind turbines for the world’s largest green hydrogen plant which is currently in development in the city.  

NEOM Green Hydrogen Co., which is developing this project, said that the wind turbines were delivered at the Port of NEOM in Oxagon.  

After the delivery, Wanchoo said that the arrival of wind turbines for the green hydrogen project is a major milestone for the port in Oxagon, as it continues to expand its operational capabilities. 


UAE’s non-oil sector growth steady amid slight PMI decline: S&P Global

UAE’s non-oil sector growth steady amid slight PMI decline: S&P Global
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UAE’s non-oil sector growth steady amid slight PMI decline: S&P Global

UAE’s non-oil sector growth steady amid slight PMI decline: S&P Global

RIYADH: The UAE’s non-oil sector growth remained stable in September, with the Purchasing Managers’ Index dipping slightly to 53.8 from 54.2 the previous month, according to S&P Global. 

Although the index remains well above the neutral 50 mark, this reading is the second-lowest in three years, only surpassing July’s figure of 53.7. 

The PMI decline was primarily driven by a slowdown in new orders and reduced job creation. 

Despite indicating robust gains, rates of growth in activity and new business across the non-oil economy receded in September. 

David Owen, senior economist at S&P Global Market Intelligence, said: “The UAE PMI continued to show a loss of momentum in the non-oil private sector, with growth having softened considerably since the start of the year.” 

He added: “Businesses faced further challenges with the completion of new work, despite a slowing of sales growth and a strong uplift in purchases.” 

Owen also highlighted the impact of competitive pressures, stating that “tougher market conditions have led to a more cautious outlook for the upcoming year — output expectations are now at their lowest since early 2023.” 

Although business activity rose in September, it did so at the slowest pace since the same month of 2021. 

Nevertheless, new business levels for non-oil firms increased sharply, bolstered by a solid rise in export sales and favorable local market conditions. 

“Firms opted to maximize revenues while sales are still strong, as output charges rose at the fastest rate for over six-and-a-half years,” said Owen. 

Although cost pressures remained significant, he added there are signs of easing inflationary trends compared to recent months. 

The report also indicated a robust expansion in Dubai’s non-oil private sector. Overall activity levels increased at the fastest pace in four months, even with a slower rise in new business volumes. 

“The expansion led non-oil businesses to increase staffing and inventories to greater degrees than in August. Supplier performance also improved, though to a lesser extent amid reports of customs delays,” stated S&P Global. 

Kuwait PMI rises 

In a separate report, S&P Global revealed that Kuwait’s PMI rose to 50.3 in September from 49.8 in August, indicating a modest expansion in new orders. 

The analysis indicated a return to growth in employment and increased business confidence among non-oil private sector companies. 

Andrew Harker, economics director at S&P Global, said: “While new orders expanded and firms raised output, growth rates are not what they were earlier in the year. It was good to see employment return to growth, but here too the rate of job creation was only marginal.” 

The report noted that price discounting and marketing efforts contributed to further expansion of new orders in September, while new export orders continued to rise steadily. 

Additionally, the analysis highlighted that purchase stocks returned to growth in September after pausing in August. 

“On the whole, companies continued to do a good job of limiting price rises to customers, but this again came in the face of sharply rising input costs, suggesting that there is some pressure on margins. It therefore remains to be seen how long firms will be able to maintain competitive pricing policies,” added Harker. 

Egypt’s businesses deteriorate 

Meanwhile, Egypt’s PMI fell to 48.8 in September from 50.4 in August, signaling weakened business conditions due to rising pressures that dampened sales. 

“As cautioned as a possible risk last month, rising price pressures curbed the non-oil private sector’s recovery in September. With input cost inflation at a six-month high and output charges rising accordingly, albeit to a softer degree, firms reported this having a dampening effect on customer orders, leading them to scale back business activity,” said Owen. 

According to the report, non-oil companies in Egypt reported a solid reduction in their activity levels in September, reversing the first uplift for three years in August. 

Despite this downturn, the report indicated sustained improvements in purchases and employment levels. 

“There were some positives from the latest data, however, namely that firms continued to increase their buying levels and staffing. The expansions suggest there is still some hope that the non-oil sector could bounce back in the fourth quarter,” added Owen. 

The report concluded by saying that business confidence in the 12-month activity outlook remained positive in September, although the degree of optimism softened from August and was the lowest in three months.


Oil climbs on prospects of wider Middle East war, ample supply caps gains

Oil climbs on prospects of wider Middle East war, ample supply caps gains
Updated 03 October 2024
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Oil climbs on prospects of wider Middle East war, ample supply caps gains

Oil climbs on prospects of wider Middle East war, ample supply caps gains

SINGAPORE: Oil prices rose on Thursday as the prospect of a widening Middle East conflict that could disrupt crude oil flows from the key exporting region overshadowed a stronger global supply outlook.

Brent crude futures were up 94 cents, or 1.27 percent, to $74.84 a barrel at 9:15 a.m. Saudi time. US West Texas Intermediate crude futures were up 99 cents, or 1.41 percent, to $71.09.

Both benchmarks had jumped over $1 earlier in the session.

“Following the initial jitters from geopolitical risks in the Middle East, we have seen some calm return to global markets, but of course, with market participants still keeping a side-eye on any upcoming Israeli response,” said Yeap Jun Rong, a market strategist at IG.

“The question for oil now is whether Iran’s energy infrastructure will be in Israel’s crosshairs,” said Yeap.

Israel bombed central Beirut early on Thursday, killing at least six people, after its forces suffered their deadliest day on the Lebanese front in a year of clashes against Iran-backed armed group Hezbollah.

The strike comes a day after Iran fired more than 180 ballistic missiles at Israel in an escalation of hostilities, which have seeped out of Israel and occupied Palestinian territories into Lebanon and Syria.

“From here, it’s a waiting game to see what the Israeli response will be and I suspect that comes after the conclusion of the Rosh Hashanah holiday tomorrow,” said IG market analyst Tony Sycamore.

“I doubt that Israel will target Iranian oil infrastructure, as such a move would likely drive oil prices toward $80, which would be frowned upon by Israel’s allies, who are making strides against inflation,” Sycamore said.

Meanwhile, US crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended Sept. 27, the Energy Information Administration said, compared with expectations in a Reuters poll for a 1.3 million-barrel draw.

“Swelling US inventories added evidence that the market is well supplied and can withstand any disruptions,” ANZ analysts said in a note.

Some investors remained unfazed as global crude supplies have yet to be disrupted by unrest in the key producing region, and spare OPEC capacity tempered worries.

“After Iran’s attack, prices may stay elevated or remain more volatile for a little longer, but there’s enough production, there’s enough supply in the world,” Jim Simpson, chief executive officer of East Daley Analytics, told Reuters.

OPEC has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities.

However, traders worry the producer group would struggle if Iran retaliates by hitting installations of its Gulf neighbors.

“The effectively available spare capacity might be much lower if renewed attacks on energy infrastructure on countries in the region happen,” said Giovanni Staunovo, a UBS analyst.


Aramco raises $3bn in oversubscribed dollar-denominated sukuk offering

Aramco raises $3bn in oversubscribed dollar-denominated sukuk offering
Updated 03 October 2024
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Aramco raises $3bn in oversubscribed dollar-denominated sukuk offering

Aramco raises $3bn in oversubscribed dollar-denominated sukuk offering

RIYADH: Saudi energy giant Aramco has completed a $3 billion international sukuk issuance, with demand exceeding expectations and reaching six times oversubscription, the company announced. 

The issuance, consisting of two US dollar-denominated tranches, includes a $1.5 billion tranche maturing in 2029 with a 4.25 percent profit rate and another $1.5 billion tranche maturing in 2034 at a 4.75 percent profit rate, according to a press release.  

Both tranches, priced on Sept. 25 at a negative new issue premium, are listed on the London Stock Exchange, reflecting Aramco’s strong credit strength. 

The issuance is part of Aramco’s efforts to diversify funding, expand its investor base, and re-establish its sukuk yield curve. It follows the company’s return to global debt markets in July, its first since 2021. 

Ziad T. Al-Murshed, Aramco executive vice president and chief financial officer, said: “Building on the strong investor reception from our July 2024 bond issuance, this sukuk offering represented an opportunity to engage with a broader investor base.”  

He added: “The impressive demand, as demonstrated by the oversubscribed sukuk order book, reflects Aramco’s unique credit proposition, underpinned by its competitive advantage and a proven track record of financial resilience through cycles.” 

In July, Aramco raised $6 billion from a three-tranche sukuk as part of its Global Medium Term Note Program. The latest issuance continues the company’s strategy to strengthen its presence in international financial markets. 

The state-owned firm’s integrated expansion strategy is driving the Kingdom’s Vision 2030 economic diversification plan while addressing sustainability concerns, experts told Arab News earlier this year. 

At the center of Saudi Arabia’s energy transformation, the energy giant is focused on creating new market opportunities and increasing integration across multiple sectors. 

Economists told Arab News that Aramco is not only focused on boosting Saudi Arabia’s economic performance but is also driving technological innovation to meet ambitious environmental targets. 

The company’s strategic roadmap includes expanding into new markets, particularly in Asia and North America, while using its venture capital arm to foster disruptive technologies.  

Aramco CEO Amin Nasser said earlier that the company is “looking at the current market status which, even though challenging, presents an excellent opportunity for growth.” This forward-thinking approach supports the company's strategic vision to solidify its position as a leader in the global energy landscape. 


Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 
Updated 03 October 2024
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Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

RIYADH: Saudi Arabia’s non-oil private sector business conditions strengthened in September, driven by improved sales momentum and rising new orders, according to an economic tracker. 

The Riyad Bank Saudi Arabia PMI survey, compiled by S&P Global, showed the Kingdom’s Purchasing Managers’ Index reached 56.3 in September, up from 54.8 in August. 

S&P Global noted that any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction. 

Supporting non-oil sector growth is a key goal of Saudi Arabia’s Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil revenue. 

“The rise in Saudi Arabia’s PMI to 56.3 shows the highest level in four months, highlighting a notable acceleration in non-oil private sector growth. This uptick was primarily driven by increased output and new orders, reflecting the sector’s expanding activity,” said Naif Al-Ghaith, chief economist at Riyad Bank.  

He added: “Businesses are responding to stronger domestic demand, which plays a critical role in reducing Saudi Arabia’s dependence on oil revenues.”  

Al-Ghaith also emphasized the significance of non-oil sector growth, given current crude production cuts and declining global oil prices. 

To stabilize the market, Saudi Arabia reduced its oil output by 500,000 barrels per day in April 2023, with the cut extended until December 2024. 

“As oil revenues come under pressure, the robust performance of the non-oil private sector serves as a buffer, helping to mitigate the potential impact on the country’s economic health. The diversification of revenue streams is crucial for maintaining growth amid fluctuating oil markets,” said Al-Ghaith.  

The report also indicated that improved business conditions supported employment growth, though companies struggled to find skilled workers in September. 

Despite strengthening demand, firms expressed concerns over competitive pressures, which dampened future activity expectations.  

S&P Global noted that higher competition led to a reduction in selling prices for the third consecutive month, despite rising business costs. 

“Rising output levels not only enhance the competitiveness of Saudi businesses but also drive forward developments aimed at expanding private sector participation in the economy. This shift provides a more stable foundation for long-term growth, making the economy less vulnerable to oil price volatility,” said Al-Ghaith.  

According to the report, growth was robust and widespread across monitored segments of the non-oil economy, with respondents citing higher demand and new project approvals. 

“By expanding output across key non-oil industries, Saudi Arabia is better positioned to navigate the challenges of oil market fluctuations, ensuring a more sustainable and diversified economic future,” concluded Al-Ghaith. 


OPEC+ sticks to output policy, doubles down on compliance

OPEC+ sticks to output policy, doubles down on compliance
Updated 02 October 2024
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OPEC+ sticks to output policy, doubles down on compliance

OPEC+ sticks to output policy, doubles down on compliance

LONDON/DUBAI: A meeting of top OPEC+ ministers has kept oil output policy unchanged including a plan to start raising output from December, while also emphasizing the need for some members to make further cuts to compensate for overproduction.

Several ministers from the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ as the group is known, held an online Joint Ministerial Monitoring Committee meeting on Wednesday.

“The JMMC emphasized the critical importance of achieving full conformity and compensation,” OPEC said in a statement after the meeting. “Furthermore, the committee will continuously assess market conditions.”

Oil prices dropped below $70 a barrel in September for the first time since 2021, but have since rallied above $75 on concerns a possible escalation in the Middle East following Iran’s military attack on Israel could disrupt output from the region.

OPEC+ is cutting output by a total of 5.86 million barrels per day, or about 5.7 percent of global demand, in a series of steps agreed since late 2022.

The group plans a 180,000 bpd increase in December as part of a gradual unwinding of its most recent layer of voluntary cuts extending into 2025. The hike was delayed from October after prices slid.

Countries’ compliance was in focus at the meeting, sources who attended told Reuters, and is expected to remain so in coming weeks, particularly that of Iraq and Kazakhstan.

Those nations have promised what are known as compensation cuts of 123,000 bpd in September and more in later months to make up for their previous over-production.

Iraq, Kazakhstan and Russia told the meeting that they had delivered on their promised cuts in September, the OPEC statement said.

But this will have to be verified by the second week of October by secondary sources — the consultancies and price reporting agencies that the group uses for determining its members’ output levels, the statement added.

The JMMC usually meets every two months and can make recommendations to change policy.

It will hold its next meeting on Dec. 1, ahead of a full meeting of OPEC+.